Paying your Netflix invoice on time might enhance your credit score rating underneath new scheme – however how good is it?
How does Boost work?
Experian already uses information such as court records and how you use credit cards, loans, mortgage products and more when giving you a credit score.
But when consumers sign up to Boost, Experian will also use your last 12 months of Open Banking data to find information about certain other payments.
Open Banking is a series of reforms to how banks deal with your financial information. In plain English, it means that banks and building societies must allow regulated businesses access to your financial data, such as your spending habits and regular payments, as long as you give your permission.
If Experian finds generally positive information in your Open Banking data – for example, you’re regularly paying into savings accounts or paying your council tax or digital subscriptions on time – it will use this to calculate a boost to your credit score, which could mean an increase of up to 66 points. The maximum score someone can be given with Experian is 999.
When you apply for credit, lenders which use Experian will be able to see your boosted score as well as a summary of the boost – though it’s up to the lender to decide if and how they’ll use the extra information. Boost currently takes three types of transaction into account:
- Council tax payments
- Digital subscriptions (eg, Netflix, Spotify or Amazon Prime)
- Payments into investments and savings (eg, ISAs and other savings accounts)
Experian wouldn’t give us details of exactly how the different payments would be taken into account – for example, if paying your council tax bill would have more of an effect than paying your Spotify subscription – saying only that factors would be “weighted appropriately”.
It will also look at the total amount paid into and out of your account to see whether you earn more than you spend.
At the moment, Boost doesn’t record other types of transaction (though transactions such as credit card and mortgage payments will already be taken into account for your pre-boosted credit score). Experian says the Boost scheme will continue to “evolve”, but didn’t give any more information about which transactions could be added in the future.
However, even if lenders do take the extra information in to account, you shouldn’t attach too much importance to your credit score – it’s what’s in your credit file that’s most crucial. Many lenders won’t even look at the credit score that Experian produces – instead, they’ll use the information contained in your credit report, plus the information you’ve given them in your application, and match you against the criteria they’re looking for in an ideal customer.